Tuesday Evening Keynote: Presidents' Conversation
Atlanta Fed president and chief executive officer Raphael Bostic moderated a conversation with Boston Fed president and CEO Susan M. Collins, and Cleveland Fed president and CEO Loretta J. Mester.
Transcript
Raphael Bostic: Good evening, everyone. Table two has it, so good evening, everyone. It's good to see you all. I hope you have enjoyed the conference today and had a nice time at the reception. I just have to say, for myself, this has been such a wonderful couple of days. The sessions have been outstanding, the company has been great, the conversation between sessions has continued a lot of the issues and the ideas that have come up through the conversation and discussions. It's really gotten me to think about a lot of things moving forward. I have a lot of takeaways, so I'm looking forward to this.
I also wanted to extend my congratulations to Larry Wall. He has been an important person for us. This conference wouldn't be what it is without Larry, so thank you for all your hard work, your commitment to making this a great thing.
I have the great privilege of being the moderator for a closing conversation with two people who I greatly admire and really enjoy being a colleague with. The first is Loretta Mester. Loretta has served as the president and CEO of the Federal Reserve Bank of Cleveland since 2014. She began her Fed career as an economist at the Philly Fed in 1985, rose to be the research director there, one of the real leaders as a female economist in the Federal Reserve System, before being appointed to head the Cleveland Fed. She earned her bachelor's in math and econ from Barnard College of Columbia, and her master's and PhD in economics from Princeton, where she was a National Science Foundation Fellow. Welcome, Loretta Mester.
Loretta Mester: Thank you.
Bostic: We're also joined by Susan Collins. Susan has been president and CEO of the Federal Reserve Bank of Boston since July 2022. She's an international economist with a lifelong interest in policy and its impact on living standards. Like Ed Glaeser last night, both of these ladies have been published 40 times more than I have. These are really just amazing scholars.
Susan has basically held every leadership position you could possibly imagine: she's been provost, dean, professor, research scholar, board member at universities and at organizations including the University of Michigan, Brookings, Georgetown, and Harvard. She earned her PhD in econ at MIT and her undergraduate degree at Harvard. Please join me in welcoming Susan Collins.
Susan Collins: Thank you.
Bostic: Now, we have some questions we have to go through. When I moderate these discussions and situations, there's a phrase we have that's called "Atlanta style." We like to have our sessions go a particular way, and so we usually start our meetings with something called a check-in question. Today's check-in question is going to be tell me an interesting fact about yourself, or share an interesting fact about yourself that you don't think people would otherwise know. I'll give you some time to reflect on that, and I'll go first.
For me, in a previous life, I was a radio DJ. I did R&B music, and I also was a sports reporter on the air for Harvard. It was hard sports times, most of the time, but it was fun to do that. If you ever get the chance to watch me watch a football game or a basketball game, you'll see what I did on the radio, so that'll be very good. Loretta, what have you got for us?
Mester: That's too hard to top. An interesting fact about me is there's actually not one interesting fact about my life that people don't know.
Collins: Oh, I beg to differ.
Mester: You going to let me get away with that?
Bostic: No, we're not going to let you get away with that. André Anderson, our first vice president, and I meet every employee on their first day and we ask them this question. They have to be asking, "Where did you grow up, and what interesting fact." Don't give us a bio, don't give us all that kind of stuff. We have a bar, a minimum bar, that you have to have to exceed, in order for the fact to count.
Mester: I knew you had a bar. It's right out there. [laughter]
Bostic: Here we go. Okay. So?
Mester: I love the opera and I plan to travel and go to the opera in my time off.
Bostic: Do you have a favorite opera?
Mester: I do not have a favorite opera. I love all opera.
Bostic: Okay, we'll just leave it at that. [laughter] Susan, what would you offer up for us?
Collins: I have to start by saying, you described this as a "situation." I didn't realize what we were getting ourselves into here. [laughter] But, in case you maybe hadn't been able to tell just by listening to me, I actually started life with a Scottish accent because I was born in Edinburgh.
Bostic: Can you slip into Scottish brogue, or something?
Collins: I don't do accents. I can't do either Jamaican or Scottish, unfortunately. I don't know how to describe my current accent. It just is what it is, but it is a true fact.
Bostic: Very good. I think we're checked in. That's very good. Every interview I've ever done, afterwards the reporter says, "It'd be journalistic malpractice if I didn't ask you about what you think is coming with the economy. What's your viewpoint of the economy?" No matter what the topic is. I want to start with that conversation, and I'll offer up my view first.
This economy has been incredibly resilient, stronger than I expected, and I've been really pleased by how fast inflation has come down in spite of that. I want to talk more about that, but I'd love to get your thoughts and additions and how you see things. Loretta, do you want to go first?
Mester: I agree with that. That's been the remarkable journey we've been on here. In the first part of the year, the economy was more resilient than we thought. Remember last year, my forecast was that we'd probably see growth this year below trend. Now, I think it'll be above trend.
The inflation data we got in the first quarter were disappointing. I never expected, really, inflation to be able to disinflate as quickly as we saw in the second half of the last year, this year, but I was disappointed that we didn't have progress in the first quarter.
We did get a welcome CPI report, but I think it's a little too soon to determine where inflation necessarily is going. Base case, I do think we're going to have inflation come down, but I think it's going to take longer than I originally thought it would.
Collins: Yes, I would actually agree with both of those comments. What I would add is just the elevated degree of uncertainty, which continues to be a real feature of the economy, both in terms of the monthly data, so to Loretta's point, really not overreacting to any one set of readings is important, but also in terms of some of the behavioral relationships.
I continue to call myself a realistic optimist. That's been true for a while. Realistic, there are risks, there are those uncertainties, but I really am optimistic, although I think it'll take longer, that we will bring inflation down with the labor market staying healthy.
Bostic: I want to talk about the labor market in a second, but just given that outlook, what are you thinking about what an appropriate policy stance should look like? Susan, we'll start with you.
Collins: Yes, sure. That actually links directly with, this is a moment when, or a period when, patience really matters. The data have been very mixed, and so being quite patient. I think it's going to take longer than I had previously thought, to second something that Loretta just said, but it's important to look really holistically at the information in the data, because they're quite mixed. The uncertainty that I mentioned before I think is a key factor as well.
We're well positioned. Policy is restrictive and we're seeing, moderately so perhaps, the economy coming into better balance. That's both on the supply side and on the demand side. That's what we need to see, but it's going to take longer for us to see the extent of progress that I think is going to be necessary to change our policy stance.
Mester: I agree with that. This is all about risk management, appropriate risk management, now. If you think about what's happened over the first part of this year, the risks that we're too restrictive and that we're going to have something go awry on the employment part of the mandate, have gone down because we saw stronger data than we expected.
The inflation data said maybe inflation is going to hang up a little bit more. That suggests that we're going to have to keep rates restrictive, and I do think they are restrictive right now, for longer than we thought. Because the real side of the economy has been as resilient as it has, we're really not taking that big of a risk in keeping our interest rate where it is for longer, until we gather that information about, what is that path of inflation? It's too soon to determine that: "Oh, no, it's all stalled out and we're not going to get disinflation, " but I also think that we have an opportunity here, given the well positioning of monetary policy, to actually gather that data and to get more confidence that inflation is on that sustainable timetable back to 2 percent.
We're well positioned, and it's going to be risk management and making sure that we keep monetary policy well positioned as we go forward through this, until we get back to price stability.
Bostic: I basically agree with both of you. I wanted to push on a little further about how we think about well positioned as we move through the rest of this year. One of the things that we've heard when our team talks to business leaders is that there's a lot of capital on the sidelines. People are really sensitive about the possibility of being able to time their reentry into the marketplace, to try to take advantage of declining interest rates so they can have a little cost benefit on this. Are you hearing the same things, and does that give you pause in terms of what a trajectory of policy should look like moving forward?
Mester: I'm not hearing that. What I am hearing is that going into the last FOMC meeting a lot of the people we talked to, and we talked to a lot of people over the District, were like, "Wow, things are actually a little bit better than I thought they would be this year." But they're still being a little cautious about not overspending, not over hiring. It's gotten easier to hire now.
They're optimistic that things actually are turning out a bit stronger than they thought, but I haven't heard that they're all poised to jump in as soon as maybe we make an interest rate cut. I do think, though, if you think about policy has to be forward looking. We wouldn't want to keep interest rates where they are now until inflation gets down to 2 percent, so at some point if inflation and inflation expectations continue to move down, you would want to bring your policy rate down to avoid an inadvertent tightening of policy because you think about the real rate.
That's going to happen at some point, but right now we need to just be a little bit, as Susan said, patient on this, and gather more data so there's more clarity around what that inflation path looks like. Frankly, we're not taking a big risk by doing that, because so far the labor market remains very healthy.
Now, I certainly think we have to balance the risk. We've got to be very attentive to what's happening on the real side of the economy, in terms of growth and the labor market, when we're doing this. But that's the job going forward, to do that evaluation and balance those risks.
Collins: I'm hearing cautious optimism as well. Again, there's some difference across sectors, and there's some unevenness. I'm hearing that, pretty widespread, it's easier to hire, that firms are not feeling like they need to raise wages at the same degree that they might have some time ago. That speaks to things coming into better balance and into some adjustment that will reduce some of the pressures that we saw, perhaps in the first quarter of this year.
But again, it's quite mixed. Different sectors are seeing different things, and I think that there's uncertainty in terms of what kind of pricing decisions might make sense going forward. This is really a time to be patient, recognizing that we are well positioned. I agree with Loretta from that standpoint as well.
Bostic: I'm going to want to ask a question about the labor markets in a second, but I did want to remind you, because I forgot to do this last time: if you have questions, use the app facility, and I'm getting them here on the iPad. We will definitely leave time for that as we move forward.
I want to just talk briefly about the labor market. The pandemic happens, we lose 22 million jobs. They come back much faster than anyone had expected. We start hearing about labor shortages. We get this imbalance in the supply side. Today, we see job growth is robust. Even with the last reading at 175,000, the average is far above population replacement, and wage growth is pretty strong, right?
How do you think about this? I didn't even mention immigration, which is in addition to this. How do you think this jibes with the notion that we're in a restrictive stance? Do you expect that labor markets are going to continue to be growing this briskly, or do you think that there is an end point that's going to come in the next year or so?
Collins: Let me jump in on that one. I totally agree that the dynamics we've seen in labor markets are unusual, really interesting, and also have lots of dynamics to them. The strength of what we've seen in labor markets has both factors that are on the supply side and also on the demand side. On the demand side, the real strength in household balance sheets has led to the strength and demand in consumption. We've seen that, and that's helped to create demand across a pretty broad set of sectors for additional workers.
On the supply side, it's not just the immigration that you mentioned, but it's also the increase in labor force participation. One of the things I've been really struck by is the extent to which that has really been concentrated among women, despite the fact that the dependent care challenges continue to be really challenging, and the extent of labor productivity increases which we've seen.
Of course, time will tell the extent to which the increases we've seen will continue, how much of it's a level increase or not, and how much of it is ongoing. I do think that there's evidence of the restrictiveness of policy showing through in some of the indicators that I mentioned. It's getting easier to hire, turnover is way down, some of the wage growth has moderated.
The strength comes from multiple factors, and the rebalancing that we're seeing shows that there is some restriction in there. Strength will continue, but perhaps not at the kind of payroll growth that we had seen, which I do think is likely to moderate, but again, over time.
Mester: I agree with that. If you talk to the firms that we talk to, they do say, as Susan said, it's become easier to hire than it was a couple of years ago and easier to retain workers than it was a couple of years ago. If you look at job openings to unemployed, that's basically almost back down to where it was pre-pandemic. Job openings have come down, the rate of job openings have come down, labor force participation, at least among prime age...which, I hate that. I feel like I'm still in my prime, and I'm not in that category. [laughter]
But anyway, prime age workforce participation has come back up, so there's a lot of evidence that it is moderating and getting into better balance, as Susan said. I do think one of the surprises has been the resilience in those numbers, because I was expecting that we would have seen a bit slower job growth by now.
It underscores what Susan said, which is that there's things going on the supply side and the demand side, but we have to be attentive to that as we go forward. That's why I think it's going to be this balancing, to make sure that we're taking into account what the risks are, and keeping policy well positioned so that it can respond no matter how things play out.
Bostic: We had a session early in the conference on transmission of monetary policy. There's been, basically for the most part or the better part of this year, a conversation about, does the Fed's policy have the same "oomph" or efficacy that it's always had, or has something fundamentally changed, such that we might think that it's not as strong as it was, or maybe there isn't any efficacy at all?
What's your take on that? Do you think that our policy still has strength? Are you feeling that it's being masked by things? What's driving the dynamic that we've seen over the last...we've been at this level for quite some time now, the better part of a year, and yet there's still a lot of energy in the economy. What do you make of that?
Collins: It seems to me that, first of all, we can't fully parse out what some of the different dynamics are. I'll tell you what my view would be, given the data that we've seen so far, and that is that a number of special factors are really playing a very important role. Special factors such as the very strong household balance sheets that we went into this cycle having, which is unusual compared to other cycles. Strong firm balance sheets as well, those have been playing a significant role.
It's also true if you go back and look at those long and variable lags estimated on prior cycles, they have a range of like four to five quarters after coming up to a peak rate for when the full effects of monetary policy would come through. We've been at the peak now, and it's only three quarters. Even from that standpoint, and those prior cycles with the lags were not estimated from a period where there had been such a long prior time of low rates.
There are a lot of reasons why special dimensions of this cycle could explain why we're moderately restrictive and we have perhaps still more in the pipeline. Although it's possible that there have been some more fundamental changes, I just don't think that we can really tell yet. My null hypothesis would be that the special factors are really playing a significant role.
Mester: If I look at what's happening to the economy, you can see that monetary policy has helped to moderate demand. If you talk to businesses, they're saying the same thing. It is harder to buy a house. There's definitely sectors where you can see the effects of monetary policy.
Now, is it as restrictive as one might have thought, given the level of interest rates? I would say probably not. Going into this, as I said, I thought that we would have seen more slowdown on the real side than we have. But I also think that there's things happening on the supply side that also have affected things, and in the last summary of economic projections we have to put in what we think the long-run neutral rate is. I raised mine, because given the estimates that I'm getting out of models on that, and also what we've seen in the economy, is it could very well be we're less restricted than perhaps we would have been beforehand. There are a number of dynamics that go into that R-star calculation.
The earlier session today talked about the balance sheet as being one of those factors, perhaps. But again, that's why it's really crucial that we stay well positioned and make sure that we're continuing to make progress on the price stability part of the mandate, and trying to keep labor markets healthy. If we can keep policy well positioned, we'll be able to achieve both parts of the mandate. What the level of interest rates are that achieves that, that's going to be the work, going forward, to evaluate that.
When we started the tightening cycle, policy was not well positioned. Inflation had been going up for quite some time, and we were still at a zero, essentially zero, interest rate. We had to move very quickly, and pretty aggressively relative to history. That was uncomfortable for some of the reasons we talked about today, in terms of the banking system. Would they be able to handle that pace of increase?
To me, a lesson here is that you don't want to get into that situation again. That's why this really evaluating risks and making sure that policy is well positioned to handle the risk, no matter which ones manifest themselves. As Susan said, there's a lot of risk out in the economy, there's a lot of uncertainty. There could be risks that we're not even thinking about now. You've got to keep yourself well positioned so that you can move either way. I think policy rates where they are, allow us to do that.
Bostic: When I get this question, I try to remind folks in many regards, we're still in a pandemic economy. All the supports that happened, the ability of families to still get income but not be able to spend, has put people in a much stronger position. I also think that the way that inflation spiked, and the forward guidance we gave to say interest rates are not going to stay where they are, caused a lot of households to refinance and lock in their lower rates, caused a lot of businesses to do the same.
A lot of parties in the economy today are not as interest rate sensitive as they might otherwise be. Actually, we had a conversation with a business leader who said, "Look, my next investments today are software as a service. I'm not buying a machine or any of those sorts of things." That is an expense; that's not credit. I'm not even interest rate sensitive on how I'm going to introduce technology into my business in the same way I was before.
All of those things are suggestive that it's just going to take a longer time for folks to turn to interest rates as something that's going to drive their decisions in a material way, but they know that it's coming. No one I've ever talked to says, "I don't think about interest rates ever anymore," and then we don't have to worry about it. It's just that, where they are today is not the first line of constraints, but it's going to get there. For me, I really think this is about efficacy, letting time pass, letting people work out of those situations, and get back into another one.
Mester: It depends on where you are. Certain sectors are quite interest rate sensitive.
Bostic: Oh, for sure.
Mester: I don't know whether I want to conclude that the world is totally different, the transmission mechanism is totally different.
Bostic: Yes, I agree with that. Our policy cascades through the economy, and it hits the most sensitive sectors first, and then it keeps flowing through. It's that flow-through that's going to change. I'm sure both of you have had the same thing talking to mortgage divisions of banks. They say we've been in a recession for a year now. It really does have that sensitivity.
I want to ask a different question about the pandemic, though. There was a lot that happened in the pandemic. What do you think is going to be some of the big, important, lasting shifts that sustain coming out of the pandemic?
Collins: I would point to a couple of things that I think are going to be lasting. One of them has to do with the way we use technology and work. There are a lot of dimensions to that. But if you think about it, we had the technology to do a lot of those remote meetings well before the pandemic, but it's hard to imagine something else that would have happened that would have caused this synchronized learning and experimentation across sectors, across geographies, across firms, for figuring out how to actually do this.
That has changed the trajectory of the way certain kinds of technology are used in work. I think that's lasting, and it's still playing out in terms of what the implications of that are. Again, we had the technology, but the pandemic really changed, collectively, the way we use it.
The other thing is how we think about supply chain. We had a conversation yesterday also about the implications of supply chain. Many of the changes predated the pandemic, but I think were often crystallized there. Everything from the fact that it's now a regular conversation at FOMC tables to look at information about supply constraints. A different understanding of how persistent they can be, but also the interactions with demand shocks, shifts in consumption behavior, and supply chain challenges at the same time. That interaction has changed both how we think about things as policymakers, how businesses think about things, and there's some lasting effects there as well. There are others, but those are two that I would highlight.
Mester: Those are big ones. I agree with those, definitely. There's also sort of a changing, maybe it's a preference shock, how people think about work and their attachment to the workforce. Maybe there's balance that came to play, and people thinking about it differently. That affects the labor market and how you think about the labor market if you're an employer. I don't know how that's going to play out, frankly, but that's something that also is, we have to think about that harder than before in terms of how much people want to balance work and life. That feeds into this work from home, which is part of this.
The other thing I would say is that technological change, people saw the benefits of moving faster and being prepared for things that you're not anticipating. More resiliency, faster innovation could come out of this as well, so there are some positives here, too.
Bostic: I'll just say on this, I try to remind people we're employers, too. We are in the mix trying to figure out the answers to these things. It's complicated, and there are lots of different preferences that are shifting that makes it actually quite a challenge. But it keeps our days lively, for sure.
I'm going to go to questions now. We have about 15 minutes left. The first question: Are we learning that lags and monetary policy are longer, or that the neutral rate is higher, or both? The ancillary, the add-on, is: What factors would lead to a higher equilibrium rate?
Collins: Why don't I jump in on that one? It's very hard, in real time, to parse out the different possible explanations, or combination of explanations, of what we're seeing. As I said before, and Raphael, you actually elaborated on, the special factors that characterize this cycle really do explain some reduced interest rate sensitivity. I actually think that that's starting to dissipate, but kind of early days. That could look like longer lags, but I see that as special factors.
I also think that there could be reasons why the underlying neutral rate might be higher, perhaps in the medium run. There are a variety of different factors that would lead to... the higher productivity that I mentioned would lead to non-inflationary higher growth, and that would be associated with a higher neutral rate, at least in the medium-term. Higher investment, whether it's for greening our economy, there's a variety of different things. The reshoring we talked about a bit last time could lead to that, too, but then those longer-term demographic factors are still there. How those are going to offset or not one another, it's just really hard to tell. That's slow moving, so it's too early to really parse those things out. It's something that we need to keep paying really close attention to.
Mester: I agree with that. There are reasons, factors you can point to, this balance between savings and investment as a driver of what the neutral rate will be in the future. The demographics actually work in two ways. The aging of the population, we think savings, people start spending down, but you're living longer so that means that you may have to work. It's very complicated, as you say, to actually come to it, but there are factors you can point to that would suggest the neutral rate may be higher now than it was in the recent past.
That's something to keep in mind, added to the underlying structural changes that are uncertain at this point, that make it a challenge to understand. But remember, the phrase is "long and variable lags," so I don't think this is that unusual that there isn't one lag that we know, that's the time frame.
Bostic: All right. We're going to now go into a modified lightning round.
Mester: I think the light is telling us to shut up, but that's okay. [laughter]
Collins: We're too long-winded.
Bostic: We are doing a modified lightning round. I'm just going to double down on that. For each question, just one of you is going to respond. We actually have a lot of questions, so I'm going to try to get through as many as possible.
Mester: This lightning round, what do we get? One word, two word, three words? What do we get?
Collins: We don't want to let him constrain us too much, Loretta.
Bostic: I knew this was going to be a hard panel to moderate. [laughter] This is what comes with familiarity, and they give as good as they get. I'll leave you to judge what the appropriate response is.
Next question is we've heard papers on reshuffled supply chains, on constraints on monetary transmission, calls for more attention to financial stability, and the spillover effects of some of these things. Susan, you mentioned, both of you mentioned, there's a lot of uncertainty out there. Where does this leave monetary policy? Are we in an era where it's more likely that there are going to be mistakes, or that there's going to be this continual scramble to try to stay on top of things? How do you think about it?
Collins: Uncertainty is not new. I do think we are in a period of elevated uncertainty. To me, what that says is that we need to look more broadly at the kind of information that we use, the quantitative as well as qualitative. While we are doing the underlying analyses, trying to potentially model out R-star and look at a variety of other factors. That's not really what's determining monetary policy decisions, meeting to meeting, in real time. It's about the risk management and balance. It's about what we're seeing in the inflation data, what we're seeing in labor market data, what we're seeing more broadly. I think of there being a constellation of information, and we're trying to get that picture, meeting by meeting, to see what makes sense. At the moment, I fully agree: being patient is exactly the right policy because I think that we are in a place where we're well balanced.
That wasn't a lightning response, but you didn't interrupt, so I take it that was all good.
Mester: I can do a lightning. Scenarios. My one word: scenario. I like scenarios, scenario planning. Look at different scenarios.
Bostic: There you have it. I would say, Susan, your answer here was I almost felt like you were clairvoyant, because the very next question on my list says: What's the constellation of data that you would need to see to make you confident it is appropriate to cut rates? But since you started it, we'll give this to Loretta.
Mester: I need to see a few more months of inflation data that looks like it's coming down, but I also am very attentive to what's going on with inflation expectations. I really believe that we were able to get the disinflation we have gotten because we did not allow long-term inflation expectations to move up.
That was a crucially important component of the disinflation we got. Last year, we got a lot of help on the supply side, and one of the reasons I didn't expect that we'd see as much progress this year is because I don't think we're going to get as much help on the supply side. As things normalize and things come into better balance in the labor market, we can't really expect that, but I do think that's going to be key for my view of where policy should go.
Bostic: All right, thank you. Next question: There's been a lot of talk about degrading quality of data, especially in terms of some of the surveys that are done by the federal government. How do you take that on board? How does that impact your thinking about having a data-dependent approach to deciding monetary policy?
Collins: I actually do think that paying careful attention to the data, how it's collected, what happens there is important, and there may be things we can do to improve it. I've long believed, well before coming into this position that when you see something similar, when you look at something in a variety of different ways and it's pointing in the same direction, that's more compelling.
To me, that really causes me to look more holistically at the range of information, both quantitative model-based analysis and qualitative, and to take the time, which we're well positioned to do, to gather more information before making decisions. That's where it leads me. That's the methodical, patient, holistic.
Mester: The other thing is that we've seen a kind of explosion of new surveys throughout the Federal Reserve Banks, so we're collecting a lot of data. The Cleveland Fed collects a lot of data on inflation expectations. Atlanta, you're very well known for the data that you collect in the surveys you do. There is a richer data source as well, that can point you in the directions, even as sample sizes for some of the official government statistics go down. We have a lot of data that we look at all the time, and that the consistency of looking at the same data, you get a sense of where the economy is going.
Bostic: I would just say, on this: both of your answers, I totally agree with. We all have realized that just relying on the set sources of data that we had from the federal government was not giving us a complete, real-time picture of where the economy is and we've all needed to supplement.
Our Bank, we have a survey center. We run a bunch of surveys. We have staff that go and just talk to people, and we try to talk to anywhere from 60 to 100 business leaders in the FOMC cycle to make sure that we're getting on-the-ground intelligence in real time, on this. It's been super helpful, I have to say, for me. It comes in, and it winds up being new information that gives a richer perspective on where the economy is.
Mester: A lot of that data that you're getting when you go...we have like, eight advisory councils that are across the District, and then a couple of other advisory councils that we have on the energy sector. What you get is more forward-looking information than some of the statistics. Those statistics are very good about telling you where you are, where you've been, where you are, maybe.
What you get when you actually do this gathering of reconnaissance across the District, is that you really get information on things that you need to keep an eye on, because of where things are going. That's been very helpful. You do have to read through because it's anecdotal. It's a little bit different than what you can do with the hard, statistical data, but it does give you a rich sense of maybe where things are headed, and where the risks are going forward. That's what I think has been very helpful, in this kind of uncertain environment of a pandemic where...people forget, at the start of the pandemic, how really, really uncertain things were, and some of the dire scenarios that could have occurred. It's good to think back to that time when things were really, really...when we were washing our mail.
Bostic: I'm glad we're not in that time today.
Collins: I'm glad we're not there.
Mester: Glad we're not there.
Collins: But I just really wanted to second the importance of some of that qualitative, and often forward-looking, information. I totally agree with that.
Bostic: Before I wrap up, I want to do one last question for both of you. It really is sort of a step back about where you are today. I want to give each of you an opportunity to reflect on what your Fed experience has been and how you've experienced it.
Susan, you're a relative newbie, and you've been here about two years. I'm seven, going on seven, and I feel like a newbie. So, there's that. Can you talk a little bit about what surprised you about heading a Reserve Bank and serving on the FOMC? How's it been?
Collins: Yes. I have to say, you learn a ton every day, working with really committed experts in a range of different fields. I walk in every day knowing I'm going to learn a lot, and that's pretty wonderful. Some of the surprises we've been talking about, this has been a really unusual time for the economy, and trying to understand what data to look at, what to pull together, how to understand. There have been certainly surprises along the way, and I expect that those will continue. I do have to say, I thought a lot about monetary policy before actually taking this role. It's not the same as actually being in the seat and thinking through, how are you going to make this decision?
Bostic: That's for sure.
Collins: Yes. That's still true, the importance of the work that we do and the commitment, and you can feel that around the FOMC table. That's not really a surprise, but it is something thing that I take really seriously. The one other thing I would say because I knew quite a bit about the Federal Reserve, but I didn't really understand the breadth of the portfolio of work that the Federal Reserve does to really support a vibrant economy.
I like to say that, for the Boston Fed, our overarching mission is a vibrant economy that works for everyone, not just for some people. The range of ways that we, through our research, through our community and economic development, through our engagement across the First District, the range of ways that we really are committed to doing that, often in collaboration, is not well known, and was also a surprise to me even though I had known quite a bit when I came in. It really matters.
Bostic: I totally agree with that. Our tagline is: An economy that works for everyone. We're kindred spirits on that journey, and it's really always an inspiration to see the ways that we can make a difference.
Loretta, for you. You've been in the Fed system for nearly 40 years. No one's going to call that a newbie. In our Bank, though, you would rank maybe 30 or 40 in terms of tenure. We have lots of long-tenured people. Can you talk about first, are you still learning day to day? Second, how would you describe the evolution of the Federal Reserve and how it's changed over your career, and what things stand out to you about where we are today as opposed to where we were when you started?
Mester: I learn every day. I hope I learn every day. Gosh, it would be kind of bad if I weren't. There's a lot to learn and I feel like I've been privileged to have my career in the Fed. It's not something I necessarily planned, and I didn't expect to stay as long as I did. But you come in, and you're an economist, and you're doing research and it's exciting, and you get to learn from a lot of really smart people, which is great, and then you take on more responsibility.
Instead of saying what's changed, I'd like to focus on what's the same: the importance of the work of the Fed, and the mission-driven people that are in the Fed, and the importance of the institution. In my Bank, I always say, it's the people who make up the institution, but the institution itself is important, and doing all we can to make sure that it stays a really healthy, vibrant institution, because the mission is so important.
In my years there, and it's been a long time—I've been in two Reserve Banks and I visited the Board of Governors—to a one, everyone is really focused on the mission of the Fed, and making sure that they're doing the best work they can because they feel the mission is very important, whether it's monetary policy or the other things that we do as Federal Reserve Banks. Whether it's the payments work that we do, whether it's the Treasury work that Kathy helps the system do. There's a lot of work that goes on in the Fed, but everybody that I've ever run into is really focused on trying to do the best work they can. I don't know whether there are that many institutions that could say that, but I've seen it, firsthand.
You go to the FOMC meetings, and I started going when Alan Greenspan was Chair, then Ben, and Janet, and Jay Powell. To a one, they all have very different styles, and that's a good dinner conversation, to sort of talk about styles. [laughter] But everyone was really focused on setting monetary policy to really, really, really achieve a healthy economy: price stability, maintain price stability. That's something that I take away from the Fed.
Bostic: I will echo that 100 percent. I tell people all the time, it's the best job I've ever had. It's because of what you were just talking about, the collection of people that work on this are just incredible, and I would count both of you among them. You have helped make my experience tremendously rich. You've helped our institution be a great one, and I just want to thank you for all your contributions that you've made, and all that you will continue to make moving forward.
It's been such a privilege for me to share a stage with Loretta and Susan. I've really enjoyed the conversation, and please thank them for their time.
I think we're done. Please enjoy your dinner and enjoy each other's company. It's been great to have you all. Thank you.